SUB-ADVISORY AGREEMENT
AGREEMENT
made as of the 29th day of September, 2006 by and between Xxxxxx Global
Investments, Inc., a Delaware corporation (the “Advisor”), and BlackRock
Financial Management, Inc., a Delaware Corporation (the “Sub-Advisor”).
WHEREAS,
the Advisor and the Sub-Advisor are registered investment advisers under the
Investment Advisers Act of 1940, as amended (the “Advisers Act”), and engage in
the business of providing investment management services; and
WHEREAS,
the Advisor has been retained to act as investment adviser pursuant to an
Investment Management Agreement, dated July 1, 2005 (the “Advisory Agreement”),
with MGI Funds (the “Trust”), a Delaware statutory trust registered with the
U.S. Securities and Exchange Commission (the “SEC”) as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
“1940 Act”), which consists of several separate series of shares, each having
its own investment objectives and policies, and which is authorized to create
additional series in the future; and
WHEREAS,
the Advisory Agreement permits the Advisor, subject to the supervision and
direction of the Trust’s Board of Trustees, to delegate certain of its duties
under the Advisory Agreement to other investment advisers, subject to the
requirements of the 1940 Act; and
WHEREAS,
the Advisor desires to retain the Sub-Advisor to assist the Advisor in the
provision of a continuous investment program for that portion of one or more
of
the Trust’s series’ (each a “Fund”) assets which the Advisor will assign to the
Sub-Advisor (the “Sub-Advisor Assets”), and the Sub-Advisor is willing to render
such services, subject to the terms and conditions set forth in this
Agreement.
NOW,
THEREFORE, in consideration of mutual covenants recited below, the parties
agree
and promise as follows:
1. Appointment
as Sub-Advisor. The Advisor hereby appoints the Sub-Advisor to act as investment
adviser for and to manage the Sub-Advisor Assets, subject to the supervision
of
the Advisor and the Board of Trustees of the Trust, and subject to the terms
of
this Agreement; and the Sub-Advisor hereby accepts such appointment. In such
capacity, the Sub-Advisor shall be responsible for the investment management
of
the Sub-Advisor Assets. The Sub-Advisor agrees to exercise the same degree
of
skill, care and diligence in performing its services under this Agreement as
the
Sub-Advisor exercises in performing similar services with respect to other
fiduciary accounts for which the Sub-Advisor has investment responsibilities,
and that a prudent manager would exercise under the circumstances.
2. Duties
of
the Sub-Advisor.
(a) Investments.
The Sub-Advisor is hereby authorized and directed, and hereby agrees, subject
to
the stated investment objectives, policies and restrictions of each Fund as
set
forth in such Fund’s prospectus and statement of additional information as
currently in effect and as amended from time to time (collectively referred
to
as the “Prospectus”) and subject to the directions of the Advisor and the
Trust’s Board of Trustees, to purchase, hold and sell investments for the
Sub-Advisor Assets and to monitor such investments on an ongoing basis. In
providing these services, the Sub-Advisor will conduct an ongoing program of
investment, evaluation and, if appropriate, sale and reinvestment of the
Sub-Advisor Assets. The Advisor agrees to provide the Sub-Advisor information
concerning (i) a Fund; (ii) its assets available or to become available for
investment; and (iii) the conditions of a Fund’s or the Trust’s affairs as
relevant to the Sub-Advisor.
(b) Compliance
with Applicable Laws, Governing Documents and Trust Compliance Procedures.
In
the performance of its duties and obligations under this Agreement, the
Sub-Advisor shall, with respect to Sub-Advisor Assets, (i) act in conformity
with: (A) the Trust’s Agreement and Declaration of Trust (the “Declaration of
Trust”) and By-Laws; (B) the Prospectus; (C) the policies and procedures for
compliance by the Trust with the Federal Securities Laws (as that term is
defined in Rule 38a-1 under the 0000 Xxx) provided to the Sub-Advisor (together,
the “Trust Compliance Procedures”); and (D) the instructions and directions
received in writing from the Advisor or the Trustees of the Trust; and (ii)
conform to and comply with the requirements of the 1940 Act, the Advisers Act,
and all other federal laws applicable to registered investment companies’ and
Sub-Advisors’ duties under this Agreement. The Advisor will provide the
Sub-Advisor with any materials or information that the Sub-Advisor may
reasonably request to enable it to perform its duties and obligations under
this
Agreement.
The
Advisor will provide the Sub-Advisor with reasonable advance notice, in writing,
of: (i) any change in a Fund’s investment objectives, policies and restrictions
as stated in the Prospectus; (ii) any change to the Trust’s Declaration of Trust
or By-Laws; or (iii) any material change in the Trust Compliance Procedures;
and
the Sub-Advisor, in the performance of its duties and obligations under this
Agreement, shall manage the Sub-Advisor Assets consistently with such changes,
provided the Sub-Advisor has received such prior notice of the effectiveness
of
such changes from the Trust or the Advisor. In addition to such notice, the
Advisor shall provide to the Sub-Advisor a copy of a modified Prospectus and
copies of the revised Trust Compliance Procedures, as applicable, reflecting
such changes. The Sub-Advisor hereby agrees to provide to the Advisor in a
timely manner, in writing, such information relating to the Sub-Advisor and
its
relationship to, and actions for, a Fund as may be required to be contained
in
the Prospectus or in the Trust’s registration statement on Form N-1A, or
otherwise as reasonably requested by the Advisor.
In
order
to assist the Trust and the Trust’s Chief Compliance Officer (the “Trust CCO”)
to satisfy the requirements contained in Rule 38a-1 under the 1940 Act, the
Sub-Advisor shall provide to the Trust CCO: (i) direct access to the
Sub-Advisor’s chief compliance officer (the “Sub-Advisor CCO”), as reasonably
requested by the Trust CCO; (ii) quarterly reports confirming that the
Sub-Advisor has complied with the Trust Compliance Procedures in managing the
Sub-Advisor Assets; and (iii) quarterly certifications regarding Material
Compliance Matters (as that term is defined by Rule 38a-1(e)(2)) that arose
under the Trust Compliance Procedures that related to the Sub-Advisor’s
management of the Sub-Advisor Assets.
(c) Sub-Advisor
Compliance Policies and Procedures. The Sub-Advisor shall promptly provide
the
Trust CCO with copies of: (i) the Sub-Advisor’s policies and procedures for
compliance by the Sub-Advisor with the Federal Securities Laws as applicable
to
the Trust (together, the “Sub-Advisor Compliance Procedures”), and (ii) any
material changes to the Sub-Advisor Compliance Procedures. The Sub-Advisor
shall
cooperate fully with the Trust CCO so as to facilitate the Trust CCO’s
performance of the Trust CCO’s responsibilities under Rule 38a-1 to review,
evaluate and report to the Trust’s Board of Trustees on the operation of the
Sub-Advisor Compliance Procedures, and shall promptly report to the Trust CCO
any Material Compliance Matter arising under the Sub-Advisor Compliance
Procedures involving the Sub-Advisor Assets. The Sub-Advisor shall provide
to
the Trust CCO: (i) quarterly reports confirming the Sub-Advisor’s compliance
with the Sub-Advisor Compliance Procedures in managing the Sub-Advisor Assets,
and (ii) certifications regarding Material Compliance Matters involving the
Sub-Advisor that arose under the Sub-Advisor Compliance Procedures that affected
the Sub-Advisor Assets. At least annually, the Sub-Advisor shall provide a
certification to the Trust CCO to the effect that the Sub-Advisor has in place
and has implemented policies and procedures that are reasonably designed to
ensure compliance by the Sub-Advisor with the Federal Securities Laws as
applicable to the Trust.
(d) Voting
of
Proxies. Unless otherwise instructed by the Advisor or the Trust, the
Sub-Advisor shall have the power, discretion and responsibility to vote, either
in person or by proxy, all securities in which the Sub-Advisor Assets may be
invested from time to time, and shall not be required to seek instructions
from
the Advisor, the Trust or a Fund. The Sub-Advisor shall also provide its Proxy
Voting Policy (the “Proxy Policy”), and, if requested by the Advisor, a summary
of such Proxy Policy suitable for including in the Prospectus, and will provide
the Advisor with any material amendment to the Proxy Policy within a reasonable
time after such amendment has taken effect. If both the Sub-Advisor and another
person managing assets of a Fund have invested in the same security, the
Sub-Advisor and such other entity will each have the power to vote its pro
rata
share of the security.
(e) Agent.
Subject to any other written instructions of the Advisor or the Trust, the
Sub-Advisor is hereby appointed the Advisor’s and the Trust’s agent and
attorney-in-fact for the limited purposes of executing account documentation,
agreements, contracts and other documents as the Sub-Advisor shall be requested
by brokers, dealers, counterparties and other persons in connection with its
management of the Sub-Advisor Assets, provided that, the Sub-Advisor’s actions
in executing such documents shall comply with federal regulations, all other
federal laws applicable to registered investment companies and the Sub-Advisor’s
duties and obligations under this Agreement and the Trust’s governing
documents.
(f) Brokerage.
The Sub-Advisor will place orders pursuant to the Sub-Advisor’s investment
determinations for a Fund either directly with an issuer or with any broker
or
dealer selected by the Sub-Advisor, pursuant to this paragraph. In executing
portfolio transactions and selecting brokers or dealers, the Sub-Advisor will
use its best efforts to seek, on behalf of a Fund, the best overall execution
available. In assessing the best overall terms available for any transaction,
the Sub-Advisor shall consider all factors that it deems relevant, including
the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific transaction
and
on a continuing basis. In evaluating the best overall terms available, and
in
selecting the broker or dealer to execute a particular transaction, the
Sub-Advisor may also consider the brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of 1934,
as
amended (the “1934 Act”)) provided to a Fund and/or other accounts over which
the Sub-Advisor may exercise investment discretion. The Sub-Advisor is
authorized to pay to a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for any of the
Funds
that is in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if, but only if, the Sub-Advisor
determines in good faith that such commission was reasonable in relation to
the
value of the brokerage and research services provided by such broker or dealer,
viewed in terms of that particular transaction or in terms of the overall
responsibilities of the Sub-Advisor to a Fund. Such authorization is subject
to
termination at any time by the Board of Trustees of the Trust for any reason.
In
addition, the Sub-Advisor is authorized to allocate purchase and sale orders
for
portfolio securities to brokers or dealers that are affiliated with the Advisor,
the Sub-Advisor, the Trust’s principal underwriter, or other sub-advisors (if
applicable) if the Sub-Advisor believes that the quality of the transaction
and
the commission are comparable to what they would be with other qualified firms,
and provided that the transactions are consistent with the Trust’s Rule 17e-1
and Rule 10f-3 procedures. The Advisor will identify all brokers and dealers
affiliated with the Trust, the Advisor, and the Trust’s principal underwriter
(and the other Sub-Advisors of the Fund, to the extent such information is
necessary for the Sub-Advisor to comply with applicable federal securities
laws), other than those whose sole business is the distribution of mutual fund
shares, who effect securities transactions for customers. The Advisor shall
promptly furnish a written notice to the Sub-Advisor if the information so
provided is no longer accurate.
In
connection with its management of the Sub-Advisor Assets and consistent with
its
fiduciary obligation to the Sub-Advisor Assets and other clients, the
Sub-Advisor, to the extent permitted by applicable laws and regulations, may,
but shall be under no obligation to, aggregate the securities or futures
contracts to be sold or purchased in order to obtain the most favorable price
or
lower brokerage commissions and efficient execution. In such event, allocation
of the securities or futures contracts so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Sub-Advisor in the
manner the Sub-Advisor considers to be, over time, the most equitable and
consistent with its fiduciary obligations to the Sub-Advisor’s Assets and to
such other clients.
(g) Securities
Transactions. In no instance will any Fund’s portfolio securities be purchased
from or sold to the Advisor, the Sub-Advisor, the Trust’s principal underwriter,
or any affiliated person the Trust, the Advisor, the Sub-Advisor or the Trust’s
principal underwriter, acting as principal in the transaction, except to the
extent permitted by the SEC and the 1940 Act, including Rule 17a-7
thereunder.
The
Sub-Advisor acknowledges that the Advisor and the Trust may rely on Rule 17a-7,
Rule 17a-10, Rule 10f-3, Rule 12d3-1 and Rule 17e-1 under the 1940 Act, and
the
Sub-Advisor hereby agrees that it shall not consult with any other sub-advisor
to the Trust with respect to transactions in securities for the Sub-Advisor
Assets or any other transactions of Trust assets.
The
Sub-Advisor is authorized to engage in transactions in which the Sub-Advisor,
or
an affiliate of the Sub-Advisor, acts as a broker for both the Fund and for
another party on the other side of the transaction (“agency cross
transactions”). The Sub-Advisor shall effect any such agency cross transactions
in compliance with Rule 206(3)-2 under the Advisers Act and any other applicable
provisions of the federal securities laws and shall provide the Advisor with
periodic reports describing such agency cross transactions. By execution of
this
Agreement, the Advisor authorizes the Sub-Advisor or its affiliates to engage
in
agency cross transactions, as described above. The Advisor may revoke its
consent at any time by written notice to the Sub-Advisor.
The
Sub-Advisor hereby represents that it has implemented policies and procedures
that will prevent the disclosure by it, its employees or its agents of the
Trust’s portfolio holdings to any person or entity other than the Advisor, the
Trust’s custodian, or other persons expressly designated by the
Advisor.
(h) Code
of
Ethics. The Sub-Advisor hereby represents that it has adopted policies and
procedures and a code of ethics that meet the requirements of Rule 17j-1 under
the 1940 Act and Rule 204A-1 under the Advisers Act. Copies of such policies
and
procedures and code of ethics and any changes or supplements thereto shall
be
delivered to the Advisor and the Trust, and any material violation of such
policies, and procedures and code of ethics by personnel of the Sub-Advisor,
the
sanctions imposed in response thereto, and any issues arising under such
policies, and procedures and code of ethics shall be reported to the Advisor
and
the Trust at the times and in the format reasonably requested by the Advisor
and
the Board of Trustees.
(i) Books
and
Records. The Sub-Advisor shall maintain separate detailed records of all matters
pertaining to the Sub-Advisor Assets, including, without limitation, brokerage
and other records of all securities transactions. Any records required to be
maintained and preserved pursuant to the provisions of Rule 31a-1 and Rule
31a-2
promulgated under the 1940 Act that are prepared or maintained by the
Sub-Advisor on behalf of the Trust are the property of the Trust and will be
surrendered promptly to the Trust upon request. The Sub-Advisor further agrees
to preserve for the periods prescribed in Rule 31a-2 under the 1940 Act the
records required to be maintained under Rule 31a-1 under the 1940
Act.
(j) Information
Concerning Sub-Advisor Assets and the Sub-Advisor. From time to time as the
Advisor, and any consultants designated by the Advisor, or the Trust may
request, the Sub-Advisor will furnish the requesting party reports on portfolio
transactions and reports on Sub-Advisor Assets held in the portfolio, all in
such detail as the Advisor, its consultant(s) or the Trust may reasonably
request. The Sub-Advisor will provide the Advisor with information (including
information that is required to be disclosed in the Prospectus) with respect
to
the portfolio managers responsible for Sub-Advisor Assets, any changes in the
portfolio managers responsible for Sub-Advisor Assets, any changes in the
ownership or management of the Sub-Advisor, or of material changes in the
control of the Sub-Advisor. The Sub-Advisor will promptly notify the Advisor
of
any pending investigation, material litigation, administrative proceeding or
any
other significant regulatory inquiry. Upon reasonable request, the Sub-Advisor
will make available its officers and employees to meet with the Trust’s Board of
Trustees to review the Sub-Advisor Assets.
(k) Valuation
of Sub-Advisor Assets. The Sub-Advisor agrees to monitor the Sub-Advisor Assets
and to notify the Advisor or its designee on any day that the Sub-Advisor
determines that a significant event has occurred with respect to one or more
securities held in the Sub-Advisor Assets. As requested by the Advisor or the
Trust’s Valuation Committee, the Sub-Advisor hereby agrees to provide additional
assistance to the Valuation Committee of the Trust, the Advisor and the Trust’s
pricing agents in valuing Sub-Advisor Assets held in the portfolio. Such
assistance may include fair value pricing of portfolio securities, as requested
by the Advisor. The Sub-Advisor agrees that it will act, at all times, in
accordance with the Trust’s Valuation Procedures, and will provide such
certifications or sub-certifications relating to its compliance with the Trust’s
Valuation Procedures as reasonably may be requested, from time to time, by
the
Advisor or the Trust.
The
Sub-Advisor also will provide such information or perform such additional acts
as are customarily performed by a Sub-Advisor and may be required for a Fund
or
the Advisor to comply with their respective obligations under applicable federal
securities laws, including, without limitation, the 1940 Act, the Advisers
Act,
the 1934 Act, the Securities Act of 1933, as amended (the “Securities Act”), and
any rule or regulation thereunder.
(l) Custody
Arrangements. The Sub-Advisor, on each business day, shall provide the Advisor,
its consultant(s) and the Trust’s custodian such information as the Advisor and
the Trust’s custodian may reasonably request relating to all transactions
concerning the Sub-Advisor Assets.
(m) Historical
Performance Information. To the extent agreed upon by the parties, the
Sub-Advisor will provide the Trust with historical performance information
on
similarly managed investment companies or for other accounts to be included
in
the Prospectus or for any other uses permitted by applicable law.
(n) Regulatory
Examinations. The Sub-Advisor will cooperate promptly and fully with the Advisor
and/or the Trust in responding to any regulatory or compliance examinations
or
inspections (including information requests) relating to the Trust, the Fund
or
the Advisor brought by any governmental or regulatory authorities having
appropriate jurisdiction (including, but not limited to, the SEC).
3. Independent
Contractor. In the performance of its duties hereunder, the Sub-Advisor is
and
shall be an independent contractor and, unless otherwise expressly provided
herein or otherwise authorized in writing, shall have no authority to act for
or
represent a Fund, the Trust or the Advisor in any way or otherwise be deemed
an
agent of a Fund, the Trust or the Advisor.
4. Services
to Other Clients. Nothing herein contained shall limit the freedom of the
Sub-Advisor or any affiliated person of the Sub-Advisor to render investment
advisory, supervisory and other services to other investment companies, to
act
as investment adviser or investment counselor to other persons, firms or
corporations, or to engage in other business activities. It is understood that
the Sub-Advisor may give advice and take action for its other clients that
may
differ from advice given, or the timing or nature of action taken, for a Fund.
The Sub-Advisor is not obligated to initiate transactions for a Fund in any
security that the Sub-Advisor, its principals, affiliates or employees may
purchase or sell for its or their own accounts or other clients.
5. Expenses.
During the term of this Agreement, the Sub-Advisor will pay all expenses
incurred by it in connection with its activities under this Agreement, other
than the costs of securities, commodities and other investments (including
brokerage commissions and other transaction charges, if any) purchased or
otherwise acquired, or sold or otherwise disposed of, for a Fund. The
Sub-Advisor, at its sole expense, shall employ or associate itself with such
persons as it believes to be particularly fitted to assist it in the execution
of its duties under this Agreement. The Trust or the Advisor, as the case may
be, shall reimburse the Sub-Advisor for any expenses as may be reasonably
incurred by the Sub-Advisor, at the request of and on behalf of a Fund or the
Advisor. The Sub-Advisor shall keep and supply to the Trust and the Advisor
reasonable records of all such expenses.
6. Compensation.
For the services provided and the expenses assumed with respect to a Fund
pursuant to this Agreement, the Sub-Advisor will be entitled to the fee listed
for the Fund(s) on Exhibit A. Such fees will be computed daily and payable
in
arrears no later than the seventh (7th) business day following the end of each
month, on behalf of the Fund(s), calculated at an annual rate based on the
Sub-Advisor Assets’ average daily net assets.
If
this
Agreement is terminated prior to the end of any calendar month, the fee shall
be
prorated for the portion of any month in which this Agreement is in effect
according to the proportion which the number of calendar days, during which
this
Agreement is in effect, bears to the number of calendar days in the month,
and
shall be payable within ten (10) days after the date of
termination.
7. Representations
and Warranties of the Sub-Advisor. The Sub-Advisor represents and warrants
to
the Advisor and the Trust as follows:
(a) The
Sub-Advisor is registered as an investment adviser under the Advisers
Act;
(b) The
Sub-Advisor is a Corporation, duly organized and validly existing under the
laws
of the State of Delaware, with the power to own and possess its assets and
carry
on its business as it is now being conducted;
(c) The
execution, delivery and performance by the Sub-Advisor of this Agreement are
within the Sub-Advisor’s powers and have been duly authorized by all necessary
action on the part of its Board of Directors and no action by or in respect
of,
or filing with, any governmental body, agency or official is required on the
part of the Sub-Advisor for the execution, delivery and performance by the
Sub-Advisor of this Agreement, and the execution, delivery and performance
by
the Sub-Advisor of this Agreement do not contravene or constitute a default
under (i) any provision of applicable law, rule or regulation; (ii) the
Sub-Advisor’s governing instruments; or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the Sub-Advisor;
and
(d) The
Form
ADV of the Sub-Advisor previously provided to the Advisor (a copy of which
is
attached as Exhibit B to this Agreement) is a true and complete copy of the
form
as currently filed with the SEC and the information contained therein is
accurate and complete in all material respects and does not omit to state any
material fact necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading. The Sub-Advisor will
promptly provide the Advisor and the Trust with a complete copy of all
subsequent amendments to its Form ADV.
(e) The
Sub-Advisor agrees to carry at all times with companies rated by A.M. Best
Company with at least an A-VII rating, or its equivalent, insurance of the
kind
and in the amount of: Professional errors and omissions liability covering
services provided hereunder by the Sub-Advisor with a combined single limit
of
not less than $5,000,000 per claim and $10,000,000 in the aggregate annually,
which insurance shall be primary to any insurance carried by the
Advisor.
(f) Any
coverage available to the Advisor shall apply on an excess basis.
(g) The
Sub-Advisor agrees to furnish to the Advisor certificates of insurance in form
and substance reasonably acceptable to the Advisor evidencing the specified
coverages and will not materially change (other than to increase the level
of
coverage) or terminate any of such coverages without at least 30 days’ prior
written notice to the Advisor. The Sub-Advisor further agrees to notify the
Advisor as soon as possible, and in any event within 60 days, when the
Sub-Advisor receives notice of any material change or termination of the
specified coverages
8. Representations
and Warranties of the Advisor. The Advisor represents and warrants to the
Sub-Advisor and the Trust as follows:
(a) The
Advisor is registered as an investment adviser under the Advisers
Act;
(b) The
Advisor is a corporation duly organized and validly existing under the laws
of
the State of Delaware, with the power to own and possess its assets and carry
on
its business as it is now being conducted;
(c) The
execution, delivery and performance by the Advisor of this Agreement are within
the Advisor’s powers and have been duly authorized by all necessary action on
the part of its Board of Directors, and no action by or in respect of, or filing
with, any governmental body, agency or official is required on the part of
the
Advisor for the execution, delivery and performance by the Advisor of this
Agreement, and the execution, delivery and performance by the Advisor of this
Agreement do not contravene or constitute a default under (i) any provision
of
applicable law, rule or regulation; (ii) the Advisor’s governing instruments; or
(iii) any agreement, judgment, injunction, order, decree or other instrument
binding upon the Advisor;
(d) The
Advisor acknowledges that it received a copy of the Sub-Advisor’s Form ADV (a
copy of which is attached as Exhibit B) prior to the execution of this
Agreement;
(e) The
Advisor and the Trust have duly entered into the Advisory Agreement pursuant
to
which the Trust authorized the Advisor to enter into this Agreement;
and
(f) The
Advisor and the Trust have policies and procedures designed to detect and deter
disruptive trading practices, including “market timing,” and the Advisor and the
Trust each agree that they will continue to enforce and abide by such policies
and procedures, as amended from time to time, and comply with all existing
and
future laws relating to such matters or to the purchase and sale of interests
in
the Funds generally.
9. Survival
of Representations and Warranties; Duty to Update Information. All
representations and warranties made by the Sub-Advisor and the Advisor pursuant
to Sections 7 and 8 of this Agreement, respectively, shall survive for the
duration of this Agreement and the parties hereto shall promptly notify each
other in writing upon becoming aware that any of the foregoing representations
and warranties are no longer true.
10. Liability
and Indemnification.
(a) Liability.
The duties of the Sub-Advisor shall be confined to those expressly set forth
herein, with respect to the Sub-Advisor Assets. The Sub-Advisor shall not be
liable for any loss arising out of any portfolio investment or disposition
hereunder, except a loss resulting from willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder, except as may otherwise be provided
under provisions of applicable state law that cannot be waived or modified
hereby. Under no circumstances shall the Sub-Advisor be liable for any loss
arising out of any act or omission taken by another sub-advisor, or any other
third party, in respect of any portion of the Trust’s assets not managed by the
Sub-Advisor pursuant to this Agreement.
(b) Indemnification.
The Sub-Advisor shall indemnify the Advisor, the Trust and each Fund, and their
respective affiliates and controlling persons (the “Sub-Advisor Indemnified
Persons”) for any liability and expenses, including reasonable attorneys’ fees,
which the Advisor, the Trust or a Fund and their respective affiliates and
controlling persons may sustain as a result of the Sub-Advisor’s willful
misfeasance, bad faith, gross negligence, or reckless disregard of its duties
hereunder; provided, however, that the Sub-Advisor Indemnified Persons shall
not
be indemnified for any liability or expenses which may be sustained as a result
of the Advisor’s willful misfeasance, bad faith, gross negligence, or reckless
disregard of its duties hereunder.
The
Advisor shall indemnify the Sub-Advisor, its affiliates and its controlling
persons (the “Advisor Indemnified Persons”) for any liability and expenses,
including reasonable attorneys’ fees, howsoever arising from, or in connection
with, the Advisor’s breach of this Agreement or its representations and
warranties herein or as a result of the Advisor’s willful misfeasance, bad
faith, gross negligence, reckless disregard of its duties hereunder or violation
of applicable law; provided, however, that the Advisor Indemnified Persons
shall
not be indemnified for any liability or expenses which may be sustained as
a
result of the Sub-Advisor’s willful misfeasance, bad faith, gross negligence, or
reckless disregard of its duties hereunder.
11. Duration
and Termination.
(a) Duration.
This Agreement, unless sooner terminated as provided herein, shall for the
Fund(s) listed on Exhibit A attached hereto remain in effect from the date
of
execution (the “Effective Date”), until two years from the Effective Date, and
thereafter, for periods of one year, so long as such continuance thereafter
is
specifically approved at least annually (i) by the vote of a majority of those
Trustees of the Trust who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on
such
approval, and (ii) by the Trustees of the Trust, or by the vote of a majority
of
the outstanding voting securities of each Fund (except as such vote may be
unnecessary pursuant to relief granted by an exemptive order from the SEC).
The
foregoing requirement that continuance of this Agreement be “specifically
approved at least annually” shall be construed in a manner consistent with the
1940 Act and the rules and regulations thereunder.
(b) Termination.
This Agreement may be terminated as to any Fund at any time, without the payment
of any penalty by: (i) the vote of a majority of the Trustees of the Trust,
the
vote of a majority of the outstanding voting securities of the Fund, or the
Advisor, or (ii) the Sub-Advisor on not less than 90 days written notice to
the
Advisor and the Trust. This Agreement may also be terminated as to any Fund
at
any time by any party hereto immediately upon written notice to the other
parties in the event of a breach of any provision to this Agreement by any
of
the parties.
This
Agreement shall not be assigned and shall terminate automatically in the event
of its assignment, except as provided otherwise by any rule, exemptive order
issued by the SEC, or No Action Letter provided or pursuant to the 1940 Act,
or
upon the termination of the Advisory Agreement. In the event that there is
a
proposed change in control of the Sub-Advisor that would act to terminate this
Agreement, if a vote of shareholders to approve continuation of this Agreement
is at that time deemed by counsel to the Trust to be required by the 1940 Act
or
any rule or regulation thereunder, the Sub-Advisor agrees to assume all
reasonable costs associated with soliciting shareholders of the appropriate
Fund(s) of the Trust to approve continuation of this Agreement. Such expenses
include the costs of preparation and mailing of a proxy statement, and of
soliciting proxies. In the event that such proposed change in control of the
Sub-Advisor shall occur following either: (i) receipt by the Advisor and the
Trust of an exemptive order issued by the SEC with respect to the appointment
of
sub-advisors absent shareholder approval, or (ii) the adoption of proposed
Rule
15a-5 under the 1940 Act (or any other substantially similar rule), the
Sub-Advisor agrees to assume all reasonable costs and expenses (including the
costs of mailing) associated with the preparation of a statement, required
by
the exemptive order or any such rule under the 1940 Act, containing all
information that would be included in a proxy statement (an “Information
Statement”). In addition, if the Sub-Advisor shall resign, the Sub-Advisor
agrees to assume all reasonable costs and expenses (including the costs of
mailing) associated with the preparation of an Information
Statement.
This
Agreement shall extend to and bind the heirs, executors, administrators and
successors of the parties hereto.
12. Amendment.
This Agreement may be amended by mutual consent of the parties, provided that
the terms of any material amendment shall be approved by: (a) the Trust’s Board
of Trustees, and (b) the vote of a majority of those Trustees of the Trust
who
are not interested persons of any party to this Agreement cast in person at
a
meeting called for the purpose of voting on such approval, if such approval
is
required by applicable law, and unless otherwise permitted pursuant to exemptive
relief granted by the SEC or No Action position granted by the SEC or its staff,
by a vote of the majority of a Fund’s outstanding securities.
13. Confidentiality.
Any information or recommendations supplied by either the Advisor or the
Sub-Advisor, that are not otherwise in the public domain or previously known
to
the other party in connection with the performance of its obligations and duties
hereunder, including portfolio holdings of the Trust, financial information
or
other information relating to a party to this Agreement, are to be regarded
as
confidential (“Confidential Information”) and held in the strictest confidence.
Except as may be required by applicable law or rule or as requested by
regulatory authorities having jurisdiction over a party to this Agreement,
Confidential Information may be used only by the party to which said information
has been communicated and such other persons as that party believes are
necessary to carry out the purposes of this Agreement, the custodian, and such
persons as the Advisor may designate in connection with the Sub-Advisor Assets.
Nothing in this Agreement shall be construed to prevent the Sub-Advisor from
giving other entities investment advice about, or trading on their behalf,
in
the securities of a Fund or the Advisor.
14. Use
of
Sub-Advisor’s Name. During the term of this Agreement, the Advisor shall have
permission to use the Sub-Advisor’s name in the marketing of the Fund, and
agrees to furnish the Sub-Advisor at its principal office all prospectuses,
proxy statements and reports to shareholders prepared for distribution to
shareholders of the Fund or the public, which refer to the Sub-Advisor in any
way, prior to the time such documents are provided to shareholders.
15. Notice.
Any notice, advice or report to be given pursuant to this Agreement shall be
deemed sufficient if delivered or mailed by registered, certified or overnight
mail, postage prepaid addressed by the party giving notice to the other party
at
the last address furnished by the other party:
(a) If
to the
Advisor:
Xxxxxx
Global Investments, Inc.
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Chief Counsel
(b) If
to the
Sub-Advisor:
BlackRock
Financial Management, Inc.
Attn:
General Counsel
00
Xxxx
00xx
Xxxxxx
Xxx
Xxxx,
XX 00000
16. Governing
Law. This Agreement shall be governed by the internal laws of the State of
New
York without regard to conflict of law principles; provided, however that
nothing herein shall be construed as being inconsistent with the 1940 Act.
Where
the effect of a requirement of the 1940 Act reflected in any provision of this
Agreement is altered by a rule, regulation or order of the SEC, whether of
special or general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
17. Entire
Agreement. This Agreement embodies the entire agreement and understanding
between the parties hereto, and supersedes all prior agreements and
understandings relating to this Agreement’s subject matter. This Agreement may
be executed in any number of counterparts, each of which shall be deemed to
be
an original, but such counterparts shall, together, constitute only one
instrument.
18. Severability.
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not
be affected thereby.
19. Certain
Definitions. For the purposes of this Agreement and except as otherwise provided
herein, “interested person,”“affiliated person,”“affiliates,”“controlling
persons” and “assignment” shall have their respective meanings as set forth in
the 1940 Act, subject, however, to such exemptions as may be granted by the
SEC,
and the term “Fund” or “Funds” shall refer to those Fund(s) for which the
Sub-Advisor provides investment management services and as are listed on Exhibit
A to this Agreement.
20. Captions.
The captions herein are included for convenience of reference only and shall
be
ignored in the construction or interpretation hereof.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first written above.
ADVISOR
XXXXXX
GLOBAL INVESTMENTS, INC.
By:
Xxxx
Xxxxxxxxxxxx
Chief
Investment Officer
SUB-ADVISOR
BLACKROCK
FINANCIAL MANAGEMENT, INC.
By:
EXHIBIT
A
BETWEEN
XXXXXX
GLOBAL INVESTMENTS, INC.
AND
BLACKROCK
FINANCIAL MANAGEMENT, INC.
September
29, 2006
MGI
CORE
OPPORTUNISTIC FIXED INCOME FUND
FEE
SCHEDULE
ASSETS ANNUAL
FEE
Assets
less than $50 Million.40%
Assets
equal to or greater than $50 Million as follows:
On
first
$100 Million.25%
On
next
$100 Million.20%
On
next
$100 Million.175%
On
next
$200 Million.15%
On
next
$500 Million.10%
Over
$1
Billion.08%
EXHIBIT
B
BLACKROCK
FINANCIAL MANAGEMENT, INC.
FORM
ADV
(Please
attach)
